Credit Suisse has to pay a $1 million fine

Credit Suisse is close to concluding an agreement on suspension of judgments in the United States. With a so-called “Deferred Prosecution Agreement,” companies can avoid a criminal investigation by committing to paying a fine and acting in good faith.

Bloomberg News reported Tuesday evening that Credit Suisse Securities Europa Ltd of London will plead guilty and pay a fine of at least $400 million for its role in a financial corruption case in Mozambique. The agency cites the testimony of a bank attorney at a court hearing. No comments were received from the bank by the deadline for editing.

Big fish – but not in the water

Eight years ago, Credit Suisse, together with the main Russian bank VTB and in some cases also with France’s BNP Paribas, arranged billions in loans to the government of the state of Mozambique in Southeast Africa, which, among other things, should have been used to build a fishing fleet . Nothing came of fishing. But the most profitable were the secret loans duped by the national parliament to a group of novice investment bankers, businessmen and political elites in Maputo.

Of the almost two billion dollars that the third poorest country in the world, according to the statistics of the World Bank, had to invest for the benefit of its population, according to the results of American corruption investigators, about 200 million dollars were stolen. The rest of the money is in a mountain of debt, which rose in 2016 in the wake of an economic crisis in the gas-rich country.

The International Monetary Fund is sounding the alarm

With the crisis at that time, dizziness began to appear. The International Monetary Fund realized in the spring of 2016 that the government had hidden two of three large loans. Until then, only one public bond, arranged by Credit Suisse, VTB and BNP, amounting to $850 million was known. The fact that all three loans were provided with government guarantees raised alarm bells at the IMF.

The investigation made decisive progress only when the US judiciary brought charges against eight alleged main actors. Including three former Credit Suisse bankers who were arrested in London in 2018 and extradited to the United States. The trio pleaded guilty in subsequent criminal proceedings and were waiting for the verdict to be announced. New Zealander Andrew Pierce admitted that he received $45 million to organize loans. Mozambican politicians and officials, who made the secret deals possible, are said to have raised about $150 million.

Typical experience in Maputo and more difficulties for Credit Suisse

In the capital, Maputo, criminal proceedings are currently underway against 19 alleged key figures in the corruption case. Among them was the eldest son, former President Armando Guebuza. Many observers predicted that the process could quickly deteriorate into backbiting, especially since the country’s current president, Philip Nyusi, was already defense minister under the old regime and would have little interest in tackling the scandal fully. In the meantime, the process is seen as a benchmark for the independence of the judiciary in Mozambique. The population of 30 million people participates extensively via live TV.

For Credit Suisse, it’s not over yet, even after the US settlement. Another trial awaits the bank in London in 2023. The bank will have to explain there why it has accepted government loan guarantees, which have since been rescinded as unconstitutional, and sold to investors as investment protection. Until now, Credit Suisse has always seen itself in the role of a fraudster. The bank argued in each case that its three former employees had threaded the criminal acts behind the bank’s management themselves. It will be interesting to see how the admission of guilt changes this logic.